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Leveraging Wealth from Farmland Appreciation: Borrowing, Land Ownership, and Farm Expansion

Listed author(s):
  • Jeremy G. Weber
  • Nigel Key

We study how increases in wealth from rapid appreciation of farmland influenced farmer decisions to borrow, buy land, and expand. Exploiting periods of high and low appreciation and a panel data model that allows for correlation between prior growth trends and the share of land owned, we find that a dollar increase in paper wealth led younger farmers to increase real-estate-secured borrowing by 48 cents. Land purchases accompanied the increase in borrowing, supporting the view that collateral-based lending may be contributing to the recent runup in farmland prices. We find no effect of land wealth on production or acres harvested.

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File URL: http://le.uwpress.org/cgi/reprint/91/2/344
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Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 91 (2015)
Issue (Month): 2 ()
Pages: 344-361

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Handle: RePEc:uwp:landec:v:91:y:2015:i:2:p:344-361
Contact details of provider: Web page: http://le.uwpress.org/

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